Quant Mutual Fund warns investors that gold has peaked out and has the potential to correct by 12-15 per cent in dollar terms over the next two months. “However, our medium-term and long-term views are equally constructive and we reiterate that a meaningful percentage of your portfolio should be dedicated towards precious metals,” it added.
June is seasonally a bullish month for crude oil and downside is already exhausted, but upside could be meaningful if EM risk-off phase magnifies; a 10-12 per cent move higher will not surprise us, the monthly release said.
It further read that with current global uncertainties, Bitcoin would be an ideal investment for high-risk appetite global investors but relative tightening of the global liquidity conditions will affect the crypto currencies in the short term. “The medium-term and long-term outlook, however, remain constructive for crypto. High-risk appetite from youngsters is essential for sustained rallies in crypto and particularly across all digital assets,” it added.
Although the DXY index has corrected quite meaningfully since January highs, it seems to be bottoming out at around current levels and a pullback rally is on the cards.
Sharing the outlook of global equities, the fund house said that although the near-term pullback thesis has played out quite well, the medium-term trend is still weak and the next few months will be quite challenging for global equity and US equity in particular. “Global equity is in a consolidation phase and not in bear market territory as perceived by disheartened investors. For a deep bear market hypothesis, we require tighter global liquidity and currently, global liquidity remains quite strong.”
The cash levels have been deployed in select mid and small caps in most schemes, Quant Mutual Fund mentioned in its monthly release. The fund house added that the portfolio remains tilted towards large caps, and overall liquidity of the portfolio is good.
The fund house also mentioned that select buying opportunities are visible in certain sectors such as PSU, Infrastructure, Hotels & Hospitality, Pharmaceuticals, Materials, Retail and Telecom.
“As we had been calling out repeatedly over the past few months, our ‘Predictive Analytics’ models were showing that the corrective phase in Indian equity was close to completion. We reiterate that select buying opportunities are visible in certain sectors, viz. PSU, Infrastructure, Hotels & Hospitality, Pharmaceuticals, Materials, Retail and Telecom,” Quant MF said in its release.
It further recommended that, “Investors worldwide, and in India, should aim to have a healthy mix of assets in their portfolio.”
The predictive analysis of the fund house endorses the risk-on for India and risk-off for the US both on absolute and relative basis and global liquidity metrics have started deteriorating and the risk-off phase for the US will continue while liquidity is rising. “The DM economy is already in recession, but it is now certain that EMs will outperform DMs in the medium-term,” it added.
Quant Mutual Fund mentioned that with the right policy support, India stands a good chance of benefiting from global supply chain shifts in the medium-term, driven by higher US tariffs on Chinese goods, likely progress on a US-India trade deal and favourable domestic conditions and India has a large domestic market (as large as China’s in 2006-07), which could be key to rapid manufacturing growth in years ahead.
According to the release, Quant Mutual Fund is seeing a complete breakdown in the traditional relationships between various asset classes viz. Gold, currencies, yields, and real interest rates, the relevance of global central banks and policy makers is declining, as they are unable to manage rising debt and inflation, despite the rising depth and breadth of the global capital markets.
The fund house further informed its investor base of nearly 95 lacs folios that the fund house was the first recipient of SEBI license for the Specialized Investment Fund (SIF) – the Long-Short fund in equity, debt and hybrid categories and this product category is suitable for sophisticated investors who are well-versed with financial markets and possess a relatively high-risk appetite and seeking more evolved investment strategies.
“Going forward, we will be unveiling a separate brand identity, separate website and communication portal specifically for SIFs. Over the coming weeks and months, we will dedicate our efforts towards educating the target audience about these products,” the fund house further hinted.
